Chrysler Corp. has received $1.2 billion in federally guaranteed loans through the aid program approved by Congress. The amount was reported incorrectly in yesterday's Business & Finance Section.

Chrysler Chairman Lee Iacocca said yesterday that "time is running out" for the U.S. automobile industry unless the government approves $1,500 tax credits for high-mileage cars and the economy improves.

Iacocca called on Congress to correct the "unfair tax and trade advantage" for Japanese auto manufacturers, to impose a surtax on imported oil or an excise tax on gasoline, and to reduce interest rates by cutting the budget deficit by $55 billion and by reducing spending for military and social programs by 5 percent.

In testimony before a House Banking subcommittee, Iacocca said the $1,500 personal investment tax credit should be offered to buyers of new cars that get more than 25 miles per gallon.

"That will increase car sales by 1 million units a year, put 250,000 Americans back to work and save a billion gallons of gasoline a year," he said.

"I believe it's time to get practical again, and to be bipartisan about it," Iacocca said. "Time is running out on the American automobile industry and on the people you represent."

Rep. Ron Paul (R-Tex.) said Chrysler had "compounded the deficit problem" with the $2.1 billion in loan guarantees the company received to bail it out of financial trouble.

"The greatest source of inflation in this country is the guaranteed loan program," Paul said.

Replied Iacocca: "My billion is child's play compared to what you guys are doing. Get the deficits down and the problem will be solved."

Iacocca said the loan guarantee was not a handout but had saved the jobs of 600,000 workers and saved money for the Treasury. "It works," he said.

"It works by taking money away from others who need it," Paul responded. "It works at the expense of the guy who needs it to buy a house."

Iacocca told the economic stabilization subcommittee that he was not requesting new help for Chrysler.

The nation's No. 3 car manufacturer is "in good shape" and has "fulfilled the commitments" made 2 1/2 years ago when Congress authorized federal loan guarantees to the struggling firm, he said.

Chrysler's own finances, bolstered by $475 billion in federally guaranteed loans, are "in pretty good shape and getting better every day," Iacocca said.

But he suggested that the Chrysler Loan Guarantee Board cut its annual administration fee of $12 million in half, because $6 million a year would cover board expenses "five times over."

Iacocca recalled the "31 months of sheer hell" following his first appearance before the committee, when he urged help in getting Chrysler back on its feet.

"However, the fact remains that, if we had not gone through those fires of hell, 600,000 American workers would not have jobs now, and they would not have a secure future," Iacocca said. "The results have been worth the effort."

He credited streamlining Chrysler's management, improving the fuel economy of the company's cars and cooperation by the firm's employes and the government.

In other testimony, Deputy Assistant Commerce Secretary Michael A. Driggs said the administration is working in a "simple and straightforward" way to improve the nation's economic climate and increase the auto industry's recovery.

"We believe that our task is to reduce inflation, to foster the growth that generates new job opportunities and to eliminate unnecessary impediments to industrial performance," Driggs said. "All other responsibility to restore the industry's competitiveness belongs to management and labor within the auto industry itself."

Lachlan W. Seward, acting executive director of the Chrysler Corp. Loan Guarantee Board, told the subcommittee that Chrysler has fared "reasonably well" in the last 2 1/2 years, although the four major U.S. car manufacturers have lost $5.5 billion.

Chrysler was the only one to increase its sales volume and market share in 1981, Seward noted.